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Defining the Relevant Markets
D. Product Market Definition for Contracting and Procurement
Using the major procurement categories for each prime contract and the primary NAICS codes
assigned by NERA to each prime contractor and subcontractor in the Master Contract/
Subcontract Database, we identified the most important Industry Groups within each contracting
and procurement category, as measured by total dollars expended. The relevant NAICS codes
and their associated dollar weights appear below in Tables 3.5 through 3.8 for Construction,
AE-CRS, Services, and Commodities, respectively.
Each Industry Group (four-digit NAICS) identified in Tables 3.5 through 3.8 consists of several
more detailed Industries (five-digit and six-digit NAICS). Overall, City of Cleveland contracting
expenditures occur in 237 NAICS Industry Groups and 561 NAICS Industries. In Construction,
City contract spending occurs across 97 NAICS Industry Groups and 171 NAICS Industries. In
AE-CRS, spending occurs across 38 NAICS Industry Groups and 63 NAICS Industries. In
Services, spending occurs across 152 NAICS Industry Groups and 293 NAICS Industries. In
Commodities, spending occurs across 120 NAICS Industry Groups and 291 NAICS Industries.
Although numerous Industry Groups and Industries play a role in the City of Cleveland’s
contracting activities, it is clear from Tables 3.5 through 3.8 that actual contracting and
subcontracting opportunities are not distributed evenly among them. The distribution of contract
expenditures is, in fact, highly skewed.
In Construction, for example, we see from Table 3.5 that just four Industry Groups alone
(NAICS 2389, 2382, 2361, and 2362) account for more than half of all contract spending, six
Groups account for over 75 percent, 12 Groups account for more than 90 percent, and the
remaining amount distributed among 85 additional Industry Groups.
Table 3.5. Distribution of Contract and Subcontract Dollars Paid by Industry Group: Construction
NAICS
Industry
Group
NAICS Description Percentage
Cumulative
Percentage
2389 Other Specialty Trade Contractors 16.23 16.23
2382 Building Equipment Contractors 15.35 31.58
2361 Residential Building Construction 12.62 44.20
2362 Nonresidential Building Construction 11.57 55.77
2371 Utility System Construction 11.26 67.03
2381
Foundation, Structure, and Building Exterior
Contractors
8.51 75.54
2373 Highway, Street, and Bridge Construction 7.31 82.85
2383 Building Finishing Contractors 2.72 85.57
3273 Cement and Concrete Product Manufacturing 2.21 87.78
NERA Economic Consulting 71